ACCA Performance Management (F5) Certification Practice Exam

What is the first stage in developing customer relationships?

1. Acquisition

2. Retention

3. Extension

4. Selection

The correct answer is: Acquisition

The first stage in developing customer relationships is acquisition. This phase involves attracting and gaining new customers to the business. Successful acquisition strategies focus on identifying target markets, understanding their needs, and creating compelling value propositions that appeal to potential customers. During this stage, businesses typically employ various marketing techniques to generate awareness and interest, ultimately leading to the initial sale or engagement with the new customer. Acquisition sets the foundation for establishing a relationship, as it introduces the customer to the brand and begins the interaction. Once the customer has been acquired, the focus can shift to retention, which involves strategies to keep existing customers engaged and loyal, and extension, which can involve upselling or cross-selling additional products or services. Selection does not pertain to the relationship-building process but instead refers to the process of choosing which customers to target, derived from an understanding of acquisition. Thus, acquisition is clearly the first essential step in building lasting customer relationships.